Auto enrolment penalties surge as small firms join


The number of compliance interventions The Pensions Regulator undertook rocketed five times during the past year with microbusinesses staging into the workplace pension regime are to blame.

According to its annual report on automatic enrolment TPR used its compliance and enforcement powers 50,068 times last year, up more than 40,000 on 2015-6. The interventions included 33,716 compliance notices, 12,181 fixed penalty notices and 2,527 escalating penalty notices.

Failure to act on a compliance notice results in a £400 fixed penalty and there are escalating fines when employers fail to comply. Those who don’t pay the fines after that face further court action; more than 150 employers were issued with county court judgements for ignoring penalty notices during the year.

“To date we have only had to bring court proceedings against a tiny proportion of employers, but every court case is one too many – and one that employers can easily avoid by becoming compliant,” said Charles Counsell, TPR’s executive director of automatic enrolment.

The surge in penalties reflects the rise in small and micro employers staging into AE. According to TPR, more than 50,000 employers had completed their declaration of compliance by the end of March 2017. But the regulator is in the process of shepherding 700,000 small and micro employers through their workplace pension duties.

“As the numbers beginning their employer duties are increasing, so the number of penalties is increasing,” noted CIPP’s Julie Hodgskin at this time last year. “Whereas medium and large companies have trained and dedicated staff to deal with payroll and the automatic enrolment of workers, small and micro employers often do not.”

According to the TPR report, however, the escalation is more about the numbers than the level of non-compliance. “The number of fines as a proportion of declarations has remained steady when compared to the previous year,” it said. In 2015-6 the percentage of fines to declarations was 3%. Last year it rose to 3.7%.